Column by Porirua City Councillor Geoff Hayward
“A stitch in time saves nine,” as the old saying goes, and sometimes, a little help with the bills can make a world of difference, especially for our elders.
I was recently contacted by Eileen, a kuia living here in Porirua who wanted to thank me for keeping the issues of water affordability in the public (she had read a recent op-ed of mine). She said that she just doesn’t know how much more she can take in rates bills. I want to thank her again for sharing her story.
“A stitch in time saves nine,” as the old saying goes, and sometimes, a little help with the bills can make a world of difference, especially for our elders. Here in Porirua, we cherish our kaumātua, and we know that for many, their homes aren’t just places to live, they’re a lifetime of hard work and a source of security. But with rising rates, that security can feel threatened, leaving some of our most valued residents struggling to make ends meet.
Every time the rates for the year (or three year period) are deliberated around the council table, we relay the common response from locals that it is hard to cover the increased cost, especially those on fixed incomes like our seniors.
For most of our kaumātua who own their own home, it’s not just a whare but also serves as their nest egg. They are therefore not cash rich, meaning a sudden change in the cost of living can be a challenge.
Other councils across the country (including Auckland City, the Far North District and Nelson City) offer what is known as a rates postponement scheme, which is a form of home equity release (or HER for short). To get rid of the jargon, it is in effect an agreement between the council and homeowners to hold off on paying the rates that are due until they choose to sell their property.
Porirua currently does not have a scheme of this type in place: we have had some support for deferring rate repayments as part of the 20/21 year because of COVID, but this would be something that would be ongoing. The prevailing advice by PCC has always been to make sure people know about the rates rebate scheme which is provided by the Department of Internal Affairs (not council directly). I could also take a brief detour and say that the recent decision to index changes to National Superannuation to salaries (instead of CPI) is a big deal in offsetting these price shocks too.
Nevertheless, rather than just pay lip service to these concerns, I’ve been pondering whether Porirua City should introduce such a scheme to give a hand. Here is where I have got to – and this is a very rough overview:
- Based on my limited research thus far, the devil is in the detail, for instance some schemes are not set by the age of the person applying (which might be more equitable) but the rates bill doesn’t come due until the house is sold. It is similar though not the same as a reverse mortgage so there is a charge for processing and interest on the balance of the unpaid rates.
- This is not a mandatory arrangement, so you have to opt in. Furthermore, whether or not we have this in place, I would always encourage people to get independent and clarified financial advice before ever taking this option.
- Unlike a reverse mortgage, it is for a specific purpose and the property owner doesn’t get any money in the hand (so no holidays or new car). However it is also important to note that some banks offer reverse mortgages, but their criteria might mean you cannot have unpaid rates so, again, the devil is in the detail.
- The loan is against the house’s value. So long as the house’s value when it is sold doesn’t go for less than the amount of equity that could cover the unpaid rates then there isn’t an issue. This is probably going to be OK for the vast majority of situations, but not always (like say if your property was red stickered).
- From the council side, we would have to borrow to cover the rates bill from that property. It might not be much for a single year, but over several years it could build up. The money from those loans can’t be used on capital expenditure like pipes and roads, so there is a risk that a council can’t access money to borrow for other things, including if there is a large natural disaster needing quick action.
- This doesn’t really help people who don’t live in their own home, like those in private rentals, but their landlords may pass on any rates bill to them through the rent.
Anyway, my colleagues around the council table know that I am keen to look into this (and whether we implement it is still something I need to keep an open mind on), but I am remain keen to know what your thoughts are – feel free to get in touch and share your two cents.